7.5M Reasons Not to Call Your Rival the Taliban

By Cynthia Hsu, Esq. on November 4, 2011 5:44 AM

With the down economy, businesses these days are trying everything to get an edge. But whatever you do, be wary of defamation laws. For example: calling your rival car dealership something akin to the "Taliban Toyota" might just end up costing you millions.

Employees at the Toyota dealership spread rumors and slurs about Shawn Esfahani, the owner of the Eastern Shore Toyota in Daphne, Alabama. They told customers that he was funneling money to insurgents. And that he was an Iraqi terrorist.

Esfahani is actually a naturalized U.S. citizen who is from Iran.

The Taliban are an extremist group originating out of Afghanistan and Pakistan.

Esfahani brought suit against Bob Tyler Toyota, alleging defamation. He prevailed. A jury deliberated for three hours before handing down their verdict: $2.5 million in compensatory damages and $5 million in punitive damages, reports Reuters.

While Bob Tyler Toyota was trying to get ahead of their competitor, they were unfortunately running afoul of the law. What should businesses know about defamation?

Oral statements are also considered defamation, and are called "slander."

For a statement to be defamatory, it only needs to be published to one other person. This other person needs to be a third party. It can't be the person who is the subject of the statement.

Statements need to cause injury in order for a defamation suit to succeed. Typically, this requires some sort of financial harm.

The statement needs to be false. Truth is usually a defense against claims of defamation.

Of course, to err on the safe side it'd probably be best not to call your rival the "Taliban Toyota." While insulting or slandering your rival may initially earn you some cash, defamation lawsuits may be financially draining in the long run.